Budget mattersIn line with Article 7.2(k), COP 1 adopted, by consensus, financial rules for
itself, the secretariat and the SBs (“financial procedures”, contained in Annex I of decision 15/CP.1). These rules provide for a two-year financial period, of which the
first year must be an even numbered year. This corresponds to the practice in the United Nations at
large. Every two years, the Executive Secretary proposes a programme budget to the SBI, setting out the
proposed activities and budget of the secretariat for the coming two years. The SBI considers the proposal
and forwards a recommended programme budget to the COP for its approval. The COP adopts the budget by
consensus. The resources of the COP comprise contributions by Parties according to an indicative scale
adopted by the COP by consensus, voluntary contributions by Parties and the uncommitted balance of appropriations
from previous financial periods and miscellaneous income. The indicative scale is based on the United Nations
scale of assessments that is adopted by the General Assembly and follows the principle that all Parties should
contribute to the Convention budget. The indicative scale, as amended at COP 4, mandates that each Party
contribute no less than 0.001 per cent nor more than 25 per cent to the Convention part of the core budget
( decision 17/CP.4).

However, the maximum assessment rate for the apportionment of the expenses of the United Nations has been lowered
to 22 per cent. The Convention applies this cap to any contributor whose adjusted assessed contribution might
exceed 22 per cent under either the Convention part of the core budget or the Kyoto Protocol part of the core
budget. Voluntary contributions are in addition to the obligatory contributions. Contributions are due
on 1 January of each calendar year. The Executive Secretary is authorized to make transfers within each of
the main appropriation lines of the approved budget. The COP has set an aggregate limit of 15 per cent of
total estimated expenditure, including a maximum of minus 25 per cent for each appropriation line. The
financial rules require the Executive Secretary to provide interim and final reports on the allocation of funds and
their use. The accounts and financial management of funds are also subject to the internal and external audit
process of the United Nations. The financial procedures also contain the request to the United Nations
Secretary-General to establish two trust funds which bear costs related to the Convention, namely:

the Trust Fund for the Core Budget of the Convention, which receives contributions from Parties, according to
an indicative scale based on the United Nations scale of assessment; and General Assembly resolution 55/5 of 22
January 2001.

the Trust Fund for Participation in the Convention process, which receives voluntary contributions and supports
participation of eligible representatives from developing country and EIT Parties in the COP and its subsidiary
bodies.

Subsequently, two additional trust funds were established in line with the provision contained in the financial
rules that, subject to the approval of the COP, the United Nations Secretary-General may establish other trust
funds, provided that they are consistent with the objectives of the Convention:

the Trust Fund for Supplementary Activities, which receives funding donated by Parties in addition to their
indicative contributions to the core budget and generally supports public awareness activities, capacity building,
inter-sessional workshops and activities related to the Kyoto Protocol (Parties often earmark their contributions
for specific projects); and

the Trust Fund for the Special Annual Contribution of the Government of Germany (the “Bonn Fund”),
which consists of an additional annual contribution from Germany, the host of the secretariat, and primarily
supports conferences and other meetings in Bonn ( decision 16/CP.3).

The CMP, at its first meeting, authorized the Executive Secretary to collect fees from operational entities under
the clean development mechanism (CDM) and users of the international transaction log (ITL) as an additional income
to the Trust Fund for Supplementary Activities. Since the biennium 2008 2009, the CDM and ITL are
expected to rely on income outside the core budget as the primary source of funding for their operating and
administrative costs. The types of fees and the modalities for their calculation and collection vary for each
entity in accordance with the decisions of the COP and the CMP. The CMP, at its third meeting, requested the
secretariat to take steps necessary to establish separate trust funds for the receipt of fees and shares of
proceeds for the administration of CDM and the ITL ( decision 11/CMP.3 (130 kB) ).

The financial rules of the Convention apply to the Kyoto Protocol mutatis mutandis (Article 13.5 of the Kyoto Protocol).

Institutional linkage of the Convention secretariat to the United NationsClimate change has
been high on the international agenda for many years and the United Nations is seen as the principal channel of the
efforts of the international community to address the challenges it poses. The mandate to negotiate a
Framework Convention on Climate Change originated in the United Nations General Assembly (UNGA), with its resolution 45/212 of 21 December 1990 entitled
“Protection of global climate for the present and future generations of mankind”. The resolution
established an Intergovernmental Negotiating Committee. Conference servicing facilities were provided by the
Office of Conference Affairs in New York throughout the negotiations until the adoption of the Convention, at which
point they were transferred to the United Nations Office in Geneva (UNOG). The negotiating process was organized
and conducted under United Nations rules and several national delegations were headed by their Permanent
Representatives to the UN in New York. After negotiating the Convention, Parties agreed to continue the link
between the Convention secretariat and the United Nations. The institutional linkage was initially approved
by the COP in April 1995 ( decision 14/CP.1) and by the UNGA in
December 1995 (resolution 50/115). This
linkage has been successively confirmed and continued by the COP and the UNGA through decisions and resolutions
since then.

It has enabled the secretariat to draw upon the support of the departments, programmes and agencies of the United
Nations and to benefit from close working relations within the United Nations community. The secretariat can
therefore call on the Department of Economic and Social Affairs, the Office of Legal Affairs and other departments,
programmes and agencies on substantive matters. The efforts to protect the global climate are thus conducted
under the umbrella of the United Nations. The administrative aspects of the linkage provide for the
secretariat to be subject to United Nations regulations and rules as far as personnel and financial matters are
concerned. UNOG provides the secretariat with administrative support for treasury and payroll. The
Executive Secretary is appointed by the Secretary-General of the United Nations after consultation with the COP
through its Bureau. Provision is made in the United Nations regular budget for conference services for
meetings of Convention and Protocol bodies in accordance with resolutions adopted by the General Assembly.
The actual service is provided by UNOG.